The Egyptian termination of a contract supplying natural gas to
Israel on Monday stemmed from a business dispute between an Israeli
company and the Egyptian Natural Gas Holding Company, Prime Minister
Benjamin Netanyahu said Monday afternoon, echoing comments made
earlier by both Israeli and Egyptian officials.

"We don´t see this cutoff as something that is born out of political
developments. It´s actually a business dispute between the Israeli
company and the Egyptian company. There are no political issues here.
But there is a lot of gas," Netanyahu said after the head of the
Egyptian company on Sunday announced the termination of its contract
to ship gas to Israel because of contractual violations.

"As time passes, our gas reserves in the Mediterranean are
increasing," the prime minister noted. "We have, as I said, the gas
reserves to make Israel totally energy independent, not only from
Egypt but from any other source, and to have Israel become one of the
world´s large exporters of natural gas. So we´re quite confident."

Finance Minister Yuval Steinitz also remarked on Israel´s gas
supplies, saying, "We must now double and triple our efforts to
expedite the supply of domestic natural gas to begin in 2012, rather
than April 2013, and overcome all the bureaucratic obstacles. We must
protect our energy independence and lower the price of electricity
for businesses and private citizens alike."

Steinitz expressed some concern, however, over Egypt´s cancellation
of the contract, saying, "This is a dangerous precedent that
overshadows the peace agreements and the peaceful atmosphere between
Israel and Egypt." Steinitz said he had not been in contact with his
Egyptian counterpart on the subject.

Following Steinitz´s remarks, Egypt´s military ruler Mohamed Hussein
Tantawi said on Monday that his country´s armed forces would defend
the borders with Israel if necessary, state media reported.

"Our borders, especially the north-east ones, are inflamed. We do not
attack neighbouring countries but will defend our territory. We will
break the legs of anyone trying to attack us or come near the
borders,” the MENA news agency quoted Tantawi as saying, during an
address to troops on annual field exercises in the Sinai
Peninsula. “Therefore our forces must be on alert and constant combat
readiness," Tantawi added.

Ties between Egypt and Israel have been strained since a popular
uprising last year toppled President Hosni Mubarak, who had put a
peace treaty with Israel at the center of his regional policy. Israel
has also said it was concerned by a security vacuum in Egypt´s Sinai
region on its border.

Egypt, the Arab world´s most populous nation, was the first to sign a
peace treaty with Israel in 1979, a move that prompted the
assassination of president Anwar Sadat in 1981 by Islamists.

Foreign Minister Avigdor Lieberman also commented on Egypt´s
cancellation of the gas deal, saying, "We want to understand this as
a trade dispute. I think that to turn a business dispute into a
diplomatic dispute would be a mistake."

"Israel is interested in maintaining the peace treaty and we think
this is also a supreme interest of Egypt," he said.

Lieberman was quoted as saying on Sunday that the situation in Egypt
was more worrying than what was happening in Iran, and called for a
significant boost to troop numbers along the southern borders.

In response, Egypt said Monday it had made a formal request for
Israel to examine the statement attributed to Lieberman, French news
agency AFP reported.

Egyptian Foreign Minister Mohammed Kamel Amr asked Cairo´s ambassador
in Tel Aviv to request "clarifications on the accuracy of the
statement attributed to the Israeli foreign minister," according to
AFP.

Meanwhile, Deputy Foreign Minister Danny Ayalon met on Monday with
Egyptian Ambassador to Israel Yasser Reda, and asked him for
clarification regarding the halted gas supply. The ambassador
stressed that the issue centered on a commercial dispute and was not
political.

Egyptian media also reported on Monday that Egyptian Energy Ministry
officials accused the Israeli company of trying to create a political
crisis in the wake of the business dispute. "This was an independent
decision of the oil and gas authorities, and only the Egyptian
Supreme Court can cancel any addenda relating to the supply of gas in
the peace treaty," one official said.

Despite the cancellation of the contract, MENA quoted the country´s
Planning and International Cooperation Minister, Faiza Abu Al-Naja,
as saying, "We have no objection to drafting a new gas sales
agreement with Israel, but this agreement will be based on a new
price and new terms."

Naja said that Egyptian gas company had apparently informed Israel it
planned to sign a new deal with it for the supply of gas, Israel
Radio reported on Tuesday.

However, the cessation of the gas supply from Egypt could already
cause significant damage to Israeli pockets: Today, Israeli citizens
are already paying high electricity rates and just last month the
rate peaked at about NIS 0.59 kilowatts per minute, an increase of
9.5 percent.

Some in Egypt, meanwhile, were pleased with the cancellation of the
agreement, saying it reflected the will of the Egyptian
people. "Despite the peace agreement with Israel, the Egyptian people
refuse any normalization," said Abdel Moneim Aboul Fotouh, an
independent candidate in Egypt´s upcoming presidential race.

Another Egyptian presidential candidate, frontrunner Amr Moussa, said
the cancellation of the agreement was a natural step for Egypt in
light of reports that the deal was "riddled with corruption," Israel
Radio reported.

Egyptian Prime Minister Kamal Ganzouri was expected to discuss the
issue with Egypt´s oil, finance and international cooperation
ministers. Al Ahram online also reported that two representatives
from Israel had arrived in Cairo to discuss the gas dispute with
relevant officials.